William Ruto promises Hustler Fund to boost businesses

President William Ruto signs an Executive Order at State House, Nairobi, on September 13, 2022. [PSCU]

The government will create a new fund to help small and micro enterprises access capital.

President William Ruto made the promise in a speech delivered during his swearing-in yesterday.

He, however, did not provide details of the fund, including the specific amount to be set aside or terms of accessing it.

He said the fund would benefit low-income groups or "hustlers" as he calls them and will be deployed through credit societies and investment groups.

"We shall implement the Hustler Fund, dedicated to the capitalisation of micro, small and medium-sized enterprises through chamas, saccos and cooperatives to make credit available on affordable terms that do not require collateral," he said in his national address after being sworn in.

Ruto who was elected on a campaign platform of lifting low-income groups from biting poverty said earlier his government would set aside Sh50 billion every year for facilitating access to capital for the groups.

His economic blueprint emphasises empowering the underprivileged through the "bottom-up economic model."

While advocating for the model, Ruto says he will use it to lift millions out of biting poverty.

"We will commit Sh50 billion a year to provide MSMEs with 100 per cent access to affordable finance through Saccos, venture capital, equity funds and long-term debt for start-ups and growth-oriented SMEs," he said.

Ruto has in the past said this model will benefit millions of Kenyans who are unemployed as well as small and medium enterprises.

"Bottom-up is anchored on deliberately promoting investment and financial instruments targeting the millions who are unemployed, hustler enterprises, and the farmer groups," he said earlier.

Raising start-up capital and access to markets are some of the biggest challenges for budding Kenyan entrepreneurs, with banks requiring collateral that most of them do not have, a past study showed.

The challenge has in part seen the rise in unregulated credit-only institutions in the country.

With their exorbitant interest rates and conditions, microcredit from the online lenders has plunged many borrowers into a debt trap.

Dozens of unregulated microlenders - many backed by Silicon Valley Venture capital firms - have invaded Kenya's credit market in response to the growth in demand for quick loans.

Their proliferation has saddled borrowers with high interest rates, which rise up to 520 per cent when annualised, leading to mounting defaults and an ever-ballooning number of defaulters who have been adversely listed with credit reference bureaus (CRBs).